Queensland Rugby Union Club Incorporated (In Liquidation) A.B.N ( the Club )

Transcription

1 Queensland Rugby Union Club Incorporated (In Liquidation) A.B.N ( the Club ) Report to Creditors 10 February Grant Thornton Report to Creditors

2 Contents Section Page 1. Overview 3 2. Report as to Affairs 4 3. Investigations 7 4. Estimated Return to Creditors Remuneration Meeting of Creditors Future Actions 14 Appendices Page A. Liquidation Receipts and Payments 15 B. Remuneration Report 16 C. ARITA Creditor Information 31 D. Meeting of Creditor s Documentation Grant Thornton Report to Creditors 2

3 Overview Introduction Graham Robert Killer and I, Michael Gerard McCann, were appointed Joint and Several Official Liquidators of the Club on 9 July 2012 pursuant to an order of the Supreme Court of Queensland. This report sets out an account of the Liquidators acts and dealings and the conduct of the winding up of the Company since my appointment and sets out the outstanding matters to completion. I confirm that this report complies with the statements of best practice issued by the Australian Restructuring Insolvency and Turnaround Association ("ARITA") (formerly known as the Insolvency Practitioners Association of Australia, or IPA) with regard to content of Liquidator reports (effective 1 July 2001) and the Code of Professional Practice with regard to remuneration (effective 1 January 2014). In June 2012, the Club s Board of Members ( the Board ) approached me to provide our consent to act as Liquidators of the Club, following a meeting of the Board in which it was determined that the Club was likely to be or become insolvent. The Board then proceeded to lodge a winding up application under s90 of the Associations Incorporation Act 1981 (QLD) with the Supreme Court of Queensland. On 9 July 2012 the Club was placed into liquidation by Order of the Supreme Court of Queensland. Although the Club was scaling downs operations prior to our appointment, the Club formally ceased trading at the date of the Liquidation. Summary of Creditor Classes To assist in reading this report, the following table outlines the creditor classes: Overview The Queensland Rugby Union Club Incorporated ( the Club ) became an incorporated entity on 6 February The Club primarily operated in the hospitality industry providing services for both members and non-members through two trading venues in Brisbane: Ballymore Stadium and Downtown, Charlotte Street. In mid-2010 the Club relocated from its Charlotte Street venue to the then newly refurbished Eagle Street premises. Following the relocation, the Club reported a loss of $5.6m for the year ended 30 June The Club s Treasurer attributed the loss to the 2011 Brisbane floods, the poor trading performance of the Zen Central restaurant business operated by the Club, and the high rental costs of the premises. Class Secured Priority Unsecured Members Shareholders Description A secured creditor has a pre-ex isting agreement w hereby security ov er particular assets are assigned to cov er the debt. This generally relates to banks and financial institutions w hen they ex tend finance; how ev er, it should be noted that net realisations from circulating assets (i.e. stock and debtors) are allocated to Priority creditors in first instance. Priority creditors are afforded priority by legislation to net realisation proceeds from the sale of circulating assets and any surplus from net realisation proceeds from non-circulating assets follow ing satisfy ing the secured creditor claims. Priority creditors ty pically include employ ee claims for outstanding entitlements. Priority creditor claims for outstanding w ages and leav e entitlements are eligible for GEERS assistance, w hich is administered by the Department of Education, Employ ment and Workplace Relations (DEEWR). Under GEERS, DEEWR adv ances funds in pay ment for the priority claims. DEEWR then has the right to subrogation of these claims in the liquidation. Unsecured creditors are creditors w ho are not afforded security by agreement or legislation and include trade creditors and any one w ho has placed a deposit w ith the Club. Members' claims for unused portions of their memberships rank as unsecured creditors. This includes both benefactor and annual memberships. Shareholders only receiv e a return should all creditors classes be satisfied entirely. As the Club is an incorporated association, this class is not relev ant Grant Thornton Report to Creditors 3

4 Report as to Affairs Report as to Affairs ( RATA ) During the course of the Liquidation, members of the Club s board were asked to submit a RATA which provides an estimate for the assets and liabilities of the Club as at the date the Club was placed in liquidation, 9 July The RATA was received by this office on 16 August A summary and comparison of the RATA and the Liquidators Estimated Realisable Value ( ERV ) follows. Cash at Bank At the date of our appointment, the Club held $984 in cash at the Eagle Street premises. Upon our appointment all banks were contacted to identify and freeze any account/s that may have been held by the Club. Upon review of the correspondence received from the banks, it was determined that the Club had no account/s other than the overdraft and loan accounts held with the National Australia Bank, in which there were no funds. RATA Liquidator's ($) ($) Assets Sundry debtors 78,042 32,354 Cash on Hand 1, Cash at Bank - 6,243 Stock 56,000 32,100 Property, Plant and Equipment ("PPE") 513, ,095 Total Assets 648, ,777 Liabilities Secured Creditors 8,026,000 8,076,361 Priority Creditors (Employ ee Entitlements) 97, ,120 Other Unsecured Creditors* 3,166,000 4,945,479 Total Liabilities 11,289,868 13,322,960 Surplus / Deficiency before realisation and administration costs (10,641,548) (13,132,183) *Other Unsecured Creditors are estimated to be in the range of $3.1m to $5m based on a rev iew of the Club's records. ERV An amount of $6,243 was recovered from funds held in a trust account. The total cash at bank of the Club as at the date of our appointment was $7,227 including the cash on hand. Property, Plant and Equipment ( PPE ) Eagle Street PPE The Eagle Street premises were the Club s primary trading location and housed the majority of the Club s assets. Upon our appointment, a valuer was engaged and advised me that the assets were worth substantially more in situ. Accordingly, discussions with the landlord s agent were commenced to discuss the possibility of either: (i) Housing the assets in situ until a new tenant could be located, thus providing the opportunity for the assets to be sold in one line with minimal relocation costs. It was also considered that by leaving the assets on site that it may assist the landlord in sourcing a new tenant; or (ii) Selling the assets by on-site auction, which was the valuers alternate realisation strategy. Although appearing supportive for an initial period, the landlord s agent, Jones Lang LaSalle, ultimately ceased discussions with regard to the abovementioned strategies and provided details of a clause in the lease which stated that title to any assets or items not removed from the premises by the expiry of the notice to vacate would pass to the landlord. The landlord had issued notice to vacate to the Club prior to our appointment. The landlord, GPT Funds Management Limited, remained non negotiable, and accordingly, it was necessary to remove all assets and items from the Eagle Street premises within a short period of time to preserve any realisations Grant Thornton Report to Creditors 4

5 Report as to Affairs (continued) Following removal from the Club s premises, the PPE was housed at an auction house where it was expected the PPE items would be sold separately; however, despite the conduct of the landlord's agent, an in one line sale was achieved with the new incoming tenant of the Club s former Eagle Street premises for an amount totalling $76,363. The requirement to remove the assets from the Club s premises with urgency significantly affected both gross and net realisations of the assets. Motor Vehicle The only motor vehicle registered in the name of the Club was sold at an on-site auction for a gross realisation of $6,364. Artwork A Charles Blackman painting was secured at the Club s Eagle Street Premises and placed in appropriate storage to preserve the asset. Various galleries and individuals were invited to submit an offer for the painting and all offers were likened to the painting s valuation. In late January 2013 the painting was sold for a gross realisation of $15,455. Ballymore Stadium The small amount of aged PPE located at Ballymore was sold at an on-site auction in October 2012 for a gross realisation of $20,913. On request of the Ballymore Stadium landlord, who was otherwise accommodating with the liquidation process, the onsite auction was delayed as to not impede on the activities of the other occupants of the premises, including the Queensland Reds. Debtors On the date of the appointment the Club s books and records suggested that $78,042 may be collectible from debtors. Upon further inspection, this amount was immediately revised downwards by $9,000 relating to an in house account for the Club s business operations. The RATA provided by members of the Board estimated the recovery of the outstanding debtors to be nil. To date $41,713 has been collected from these debtors and debts of $25,756 have been proved as either paid to the Club prior to our appointment or written off due to circumstances that surfaced prior to our appointment. We consider the remaining $1,573 to be potentially uncollectible. Stock The RATA indicated that $56,000 worth of stock, namely alcoholic and nonalcoholic beverages, was on hand at the date of appointment. A number of suppliers claimed retention of title over items of stock; however, after liaising with these suppliers and reviewing documentation in relation to the stock, the claims were rejected. Following a physical inspection of the stock, all unsealed and opened stock was disposed of as only sealed beverages could be sold. Total gross realisations were $32, Grant Thornton Report to Creditors 5

6 Report as to Affairs (continued) Creditors The RATA submitted by members of the Board did not include details of claims by Priority creditors on the basis that the General Employee Entitlements and Redundancy Scheme (GEERS) would likely satisfy most employee entitlement claims. However, it is noted that in respect to any funds advanced by GEERS, GEERS is entitled to subrogate to the position of the employees claims (i.e. GEERS will take the priority place of the employee in any subsequent distribution in the liquidation). It is noted that GEERS has a number of exclusions, including outstanding superannuation. In this regard GEERS will not pay employees of the Club in relation to outstanding superannuation claims. We have completed our review of the Club s books and records and verified all employees outstanding entitlements with the Department of Education, Employment and Workplace Relations (DEEWR), who administers GEERS. Employees who submitted a claim with GEERS have received a distribution in respect to their relevant outstanding entitlements. We encourage all other employees who have outstanding entitlements and have not yet submitted a claim with GEERS to do so as soon as possible. Should any employee have any questions regarding the GEERS process, we suggest contacting GEERS directly on or online via Grant Thornton Report to Creditors 6

7 Investigations Investigations Following our appointment, the computer equipment containing the Club s electronic records (including financial and operational records) was secured from the Club s premises; however, the electronic data was inaccessible in its standalone form as it required authorisation from the service provider. This significantly delayed our investigations, as well as debtor recoveries, as the services provider in question refused to provide authorisation for the data as they were also claiming retention of title to some items of computer equipment. Authorisation and access to the data was ultimately achieved in mid Antecedent transactions recoverable by a Liquidator The winding-up of an incorporated association under section 90 of the Associations Incorporation Act 1981 (QLD) is declared to be an applied Corporations legislation matter for the Corporations (Ancillary Provisions) Act 2001, part 3, and in relation to the Corporations Act, part 5.7. Under Part 5.7B of the Corporations Act 2001 ( the Act ), a Liquidator is able to investigate and recover antecedent transactions. The transactions generally fall into two categories, being insolvent trading and voidable transactions (comprising unfair preferences and uncommercial transactions). The outcomes of our investigations are detailed as follows. Insolvent trading Pursuant to Sections 588G and 588M of the Act, a Liquidator may seek to recover from the Board of Members of the Club any debt incurred by the Club after a time that a reasonable person would suspect that the Club was insolvent. The Act implies a business is insolvent if it is unable to pay its debts as and when they become due and payable. Assessed Date of Insolvency Based upon our investigations, we have determined that the Club is likely to have been insolvent from at least 31 January The main catalyst that contributed to the insolvency of the Club was the 2011 Brisbane floods. I make the following observations based on my solvency analysis:- The Club recorded poor financial results in FY10, FY11 and FY12: FY10 The Club recorded a material trading loss of $2.6m The Club reported a material net asset position of $0.27m FY11 The Club recorded a material trading loss of $5.65m The Club reported a material net asset deficiency of $5.38m, a significant deterioration since the net asset position of $0.27 recorded for FY10 FY12 The Club s management accounts indicate a trading loss of $0.91 prior to accounting for impairment, depreciation and amortisation which are expected to have been significant (for comparison, these items totalled $1.3m and $3.4m in FY10 and FY11 respectively). The Club s management accounts indicate a net asset deficiency in excess of $5.92m at 30 June Grant Thornton Report to Creditors 7

8 Investigations (continued) While the Club appears to have kept within terms of its trade creditors in the year prior to the Liquidation, this appears to have only been possible due to ongoing funding and compromises by the Club s lender and the Club s landlord to which the Club owed significant debt. The Club s borrowings and outstanding rent at 30 June 2011 were $7.39m and $2.45m, respectively, and at 30 June 2012 were $7.39m and $2.45m. In the Independent Auditor s Report dated 14 October 2011, the Club s auditor noted that the working capital deficiency for the Club in FY11 was $5.88m and in FY10 was $6.87m. The Club s auditor emphasised that the Club s future viability was dependent on the success of discussions between the Club, its lender and its landlord and that there would be significant uncertainty concerning the viability of the Club s business if these discussions were unsuccessful. It is evident from the $5.6m loss that occurred in FY11 that the floods had a detrimental impact on the business. During the floods the Club was temporarily closed for several months resulting in the significant loss attributable to the shortfall in income whilst still incurring rental expenses for the premises. The Club appears to have had available funding following the floods, which included available capacity of banking facilities and the willingness of members to advance donations and additional levies (including the flood levy contributions which some members made). The opinion of the Independent Auditor s Report dated 14 October 2011 that the Club s future viability was dependent on the success of discussions between the Club, its lender and its landlord. Considering the above points, although the Club was trading poorly and struggling financially since the floods in January 2011, it is possible that the Club was solvent until such time as discussions with the landlord and the lender were unsuccessful. In conclusion, we have determined that the Club is likely to have been insolvent from at least 31 January It could be suggested that the Club may have been insolvent as a result of the occurrence of the floods in January 2011, however, the following considerations suggest it may have been reasonable to consider the Club could meet its debts due at the time: Repayment arrangements were entered into with certain creditors, which deferred when debts of the Club were due. We note that following the floods, the Club had repayment arrangements and/or compromises in place with at least the Landlord, the Australian Taxation Office and its lender, all of which were significant debts Grant Thornton Report to Creditors 8

9 Investigations (continued) Insolvent Trading Claim Having established the likely date the Club became insolvent, a Liquidator can investigate whether the Club incurred debts (which remain outstanding at the date of the appointment of the Liquidator) at a time when it suspected or should have suspected the Club was insolvent ( insolvent trading ). Directors of such a corporation have several defences available to them as detailed in section 588H of the Act, as follows: i. If it is proved that, at the time the credit was incurred, the person had reasonable grounds to expect, and did expect, that the company was solvent at that time and would remain solvent. ii. iii. iv. If the person relied on another person to provide the financial information so that if the information was relied upon, the company was solvent and would remain so. The person was ill and did not take part in the management of the company. The person took reasonable steps to prevent the company from incurring the debt. We have not assessed whether any of these defences would be applicable to the members of the Club's Board. Quantum of Insolvent Trading Claim A review of the Club s records indicates that the Club had outstanding debts in the vicinity of $13m at the date of the appointment of the Liquidators. Only debts which were incurred after the suspected date of insolvency are included for the calculation of the Insolvent Trading claim. Certain debts, such as borrowings and rent, were entered into prior to the date of insolvency and are therefore excluded from this calculation. The amount of debt incurred during the suspected period of insolvency, being from at least 31 January 2012, which remained outstanding at the date of our appointment is expected to be in the vicinity of $800k. This amount is comprised of debts owing to the ATO (c. $140k), Ordinary Trade Creditors (c. $310k) and Members (up to c. $350k). There are insufficient funds available in the Liquidation to pursue any course of action against the Members of the Board to recover the value of debts incurred whilst insolvent. We have not assessed the likely outcome of such recovery action or considered any of the defences available to the Board of Members. Should any creditors wish to provide funding to further investigate and pursue such action, please contact the Liquidator within 30 days of receipt of this report. Our findings in respect of the insolvent trading will be reported to the Office of Fair Trading during the course of the Liquidation Grant Thornton Report to Creditors 9

10 Investigations (continued) Unfair preferences Pursuant to Section 588FA and 588FE and the associated provisions of the Act, a Liquidator is able to recover from creditors any payments, preferences or advantages obtained by a creditor from the Club. Those payments referred to are generally recoverable if the payments were made during a period of six months prior to the commencement of the winding up date, which in this case would be the period 9 January 2012 to 9 July To constitute an unfair preference payment, it must be proven that: i. The creditor received an advantage over other creditors; and ii. iii. The Club was insolvent at the time of the payment; and The creditor suspected, or ought to have suspected, that the Club was insolvent. We have examined payments made to creditors between 9 January 2012 and the date of appointment. From our investigations we have concluded that no recoveries are likely to be made from the pursuit of such transactions as it appears no material benefit was afforded to any particular creditor. Generally speaking, most creditors received a net benefit, and were paid within trading terms, to the detriment of the secured creditor/financier. Uncommercial transactions Section 588FB(1) of the Act defines an uncommercial transaction as a transaction of the company if, and only if, it may be expected that a reasonable person in the company s circumstances would not have entered into the transaction, having regard to: i. The benefits (if any) to the Company of entering into the transaction; ii. iii. The detriment to the Company of entering into the transaction; and The respective benefits to other parties to the transaction. Section 588FC of the Act defines an insolvent transaction as one which is an uncommercial transaction and entered into when the Club was insolvent at the time of the transaction, or became insolvent as a result of entering into the transaction. A review of the Club s records has not identified any uncommercial transactions. Books and records Sections 588E(3) and 588E(4) of the Act provides a presumption of insolvency for a period of 12 months from the relation back date if it is proved that the Club failed to keep proper financial records in accordance with Section 286 of the Act. The financial records provided to our office included: i. Bank statements; ii. iii. Accounting software and reports; and Copies of prior year financial reports. We consider the financial records held by the Club to be adequate. Enforceability of floating charges Under section 588FJ of the Act, a floating charge registered within 6 months of the date of the application to wind up the Club, that is Monday, 9 January 2012, is void as against a liquidator except so far as the charge secured an advance paid to the Club, or at its direction, at or after the charge is registered and as a consideration for the charge. We have identified no such charges in this liquidation. Summary of Investigations It is not likely that any recoveries will be made from unfair preferences, uncommercial transactions or insolvent trading Grant Thornton Report to Creditors 10

11 Estimated Return to Creditors Liquidation Receipts and Payments Funds of approximately $102,000 are presently held in the Liquidation. A summary of the Liquidators receipts and payments for the period 9 July 2012 to 31 December 2013 is attached at Annexure A. Estimated Return to Creditors An estimate of the return to creditors in the Liquidation is details opposite. No return is expected to Priority Creditors. We suggest that employees with outstanding entitlements submit their claim with GEERS. No further return is expected to Secured Creditors. The first and final distribution to the Secured Creditor has already been made from realisations of non-circulating assets in the liquidation and the Secured Creditor has incurred a very substantial shortfall. No return is expected to Unsecured Creditors. It is expected there will be a shortfall of $87,716 to the Liquidators for our costs incurred. Estimated Outcome Statement as at 31 December 2013 Notes Amount ($) Cash at Bank as at 31 December ,005 Net Cash Available 102,005 Estimated Liquidation Costs Bank Charges 2 (200) Liquidators' fees as at 31 December (159,521) Estimated Liquidators' fees for the period 1 January 2014 to Finalisation 4 (20,000) Estimated Liquidators' Disbursements 5 (10,000) Total Liquidation Costs (189,721) Shortfall on Liquidation costs (87,716) Creditors Priority Employ ee Entitlements (Wages and Superannuation) 6 (21,662) Priority Employ ee Entitlements (Leav e and Retrenchment) 7 (279,458) Secured Creditor Shortfall (Unsecured claim) 8 (8,024,073) Unsecured Creditors 9 (4,945,479) Total Unsecured Claims (13,270,672) Total Shortfall (13,358,387) Notes: 1. Based on actual receipts and pay ments as at 31 December A general contingency for monthly bank charges to be incurred. 3. Based on professional fees incurred throughout the liquidation. Assumes pay ment of fees is limited to av ailable funds in the liquidation. It is likely that $91,805 in liquidators' fees w ill be paid, leav ing an estimated total shortfall of $87, Represents additional time to be incurred in finalising the liquidation, including holding the meeting of creditors and finalising inv estigations. As mentioned abov e, these future liquidation costs are not ex pected to be recov ered. 5. A general contingency for disbursements incurred from the commencement of the liquidation to finalisation. This includes significant printing and postage costs associated w ith reporting to the large number of members and creditors of the Club. 6. Comprised of: (i) Outstanding superannuation pay able for the months of June and July as per the Club's books and records; and (ii) Outstanding w ages not adv anced (capped) by GEERS; and (iii) Wages adv anced by GEERS w hich GEERS has the right to subrogation. 7. Comprised of: (i) Leav e and retrenchment entitlements adv anced by GEERS w hich GEERS has the right to subrogation; and (ii) Leav e and retrenchment y et to be claimed by employ ees through GEERS. 8. The realisation of non-circulating assets enabled a first and final div idend of $52, to be paid to the Secured Creditor, resulting in a significant shortfall to the Secured Creditor. 9. Based on the Club's records and claims made by Unsecured Creditors Grant Thornton Report to Creditors 11

12 Remuneration Remuneration In order for the Liquidator to receive remuneration, such remuneration is to be approved by creditors or the Court. We anticipate the total cost of the Liquidation to be in the order of $179,721 (excluding GST); however, we note that the amounts to be drawn for remuneration are limited to the extent of available funds, which are estimated to be approximately $91,805. In accordance with the Code of Practice issued by the ARITA, please find enclosed (as Annexure C) an ASIC Creditor Information Sheet providing information on approval of remuneration. Remuneration to be approved Work to date At the meeting, Creditors will be requested to approve remuneration for work undertaken from 9 July 2012 to 31 December 2013, totalling $159,521 (excluding GST). It is noted that approximately $33,109 of our fees were incurred in the realisation of non-circulating assets and will be drawn from funds received from same. Detailed information on the calculation of remuneration for the Club is provided in the attached in Annexure B. Remuneration to be approved Future work of the Liquidators At the meeting, Creditors will also be asked to consider the approval of the Liquidator s remuneration of the future work to the finalisation of the Liquidation. Remuneration will be drawn on a periodic basis from the funds available in the Liquidation. There is no indemnity provided by any third party for remuneration or liabilities. Creditor s resolutions At the forthcoming meeting, creditors will be asked to consider the following resolutions: Remuneration to be approved Work to date That the remuneration of the Liquidator, his partners and staff incurred in relation to the Liquidation of Queensland Rugby Union Club Incorporated (In Liquidation) for the period 9 July 2012 to 31 December 2013, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton - Recovery and Reorganisation Services. Such remuneration is to be set at $159,521, plus GST and disbursements, and should be drawn to the extent of available funds. Remuneration to be approved Future work of the Liquidators That the remuneration of the Liquidator, his partners and staff for work carried out in relation to Queensland Rugby Union Club Incorporated (In Liquidation) be hereby calculated by reference to the current and future hourly rates of Grant Thornton-Recovery and Reorganisation Services. Such remuneration for the period 1 January 2014 to the finalisation of the Liquidation is to be capped at $20,000 plus GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any annual increase to hourly rates charged will not exceed 10% of the current or prior year s hourly rates of Grant Thornton-Recovery and Reorganisation Services. Detailed information on the calculation of remuneration including a breakdown of the future work to be undertaken during the Liquidation is provided in the attached Resolution 2: Part 5 at Annexure B Grant Thornton Report to Creditors 12

13 Meeting of Creditors A meeting of creditors of the Queensland Rugby Union Club Incorporated (In Liquidation) is to be held:- Date: Thursday, 27 February 2014 Time: Place: 10:00 am Level 18, King George Central 145 Ann Street The purpose of the meeting is to consider: Brisbane Queensland The Report as to Affairs submitted by the Board of Members. 2. Fix the remuneration of the Liquidator. 3. Receive an account of the Liquidator s acts and dealings and of the conduct of the winding up to date. 4. Authorise the Joint and Several Liquidators to destroy the books and records of the Club within a period of six (6) months after dissolution of the Club. Please ensure that the proxies are signed under seal, where appropriate (if you are a company) and if the proxy is executed by a power of attorney, that a copy of the power of attorney is enclosed with the proxy form. Proxies for the meeting can be lodged in the following ways: by post to arrive prior to the meeting; by facsimile to (07) by 4pm 26 February 2014; by person with a person attending the meeting; or by to qruc@au.gt.com by 4pm 26 February If proxies are lodged by facsimile or , the law requires that the original proxy must be lodged with the Liquidators. If you are attending the meeting, it would be appreciated if you could arrive at the meeting venue at least 15 minutes before the scheduled commencement time to allow for the registration of attendees. Attached are the following meeting documents: Form 529 Notice of Meeting of Creditors Form 532 Appointment of Proxy Form 535 Formal Proof of Debt or Claim Proxies and formal proofs of debt need to be lodged to enable creditors to vote at the meeting Grant Thornton Report to Creditors 13

14 Future Actions Future Actions In order to progress the Liquidation to finalisation, we intend to: Finalise investigations and report findings to the Office of Fair Trading; Consider pursuing further investigations of, and recovery action in respect to, an insolvent trading claim, subject to funding being provided by creditors. Comply with statutory reporting obligations; and Deregister the entity. Should any creditors wish to provide funding to pursue action against the Board of Members for the recovery of the value of debts incurred whilst insolvent, please contact the Liquidator within 30 days of receipt of this report. Should you require any further information please contact Aaron Previte of this office on or Yours faithfully Michael McCann Liquidator 2014 Grant Thornton Report to Creditors 14

15 Annexure A Queensland Rugby Union Club Incorporated (In Liquidation) Summary of receipts and payments as at 31 December 2013 Receipts and Payments Amount ($) Liquidation Receipts Debtor collections 41,784 Realisation of non-circulating assets 131,005 Realisation of circulating assets 42,532 GEERS advance to be distributed to employees 248,417 Total Liquidation Receipts 463,738 Liquidation Payments Advertising (8,073) Agent's fees (33,677) Auctioneer's charges (2,382) Bank charges (185) GST remittance (10,554) Insurance (781) Legal fees (3,116) Storage expenses (2,260) GEERS advance distributed to employees (incl of PAYG withheld) (248,416) First and final distribution to Secured Creditor (52,288) Total Liquidation Payments (361,732) Cash at bank as at 31 December ,005 Note: Figures are inclusive of GST where applicable 2014 Grant Thornton Report to Creditors

16 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 1 of 15 Part 1: Declaration We, Michael Gerard McCann and Graham Robert Killer, of Grant Thornton Australia Limited have undertaken a proper assessment of this remuneration claim for our appointment as Liquidators of Queensland Rugby Union Club Incorporated (In Liquidation), in accordance with the law and applicable professional standards. We are satisfied that the remuneration claimed is in respect of necessary work, properly performed and to be properly performed, in the conduct of the Liquidation. Part 2: Executive Summary This remuneration report details approval sought for the following fees: Period Past remuneration approved: Report Reference Amount (ex GST) Amount Paid (ex GST) No remuneration has been approved $0.00 $0.00 Total past remuneration approved $0.00 $0.00 Current remuneration approval sought: Liquidation Resolution 1: 9 July 2012 to 31 December 2013 Part 3 $159,521 $0.00 Resolution 2: 1 January 2014 to Finalisation Part 5 $20,000 $0.00 Total future remuneration to be approved $179,521 $0.00 * Approval for the future remuneration sought is based on an estimate of the work necessary to the completion of the liquidation. Should additional work be necessary beyond what is contemplated, further approval may be sought from creditors Grant Thornton Report to Creditors

17 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 2 of 15 Please refer to report section references detailed above for full details of the calculation and composition of the remuneration approval sought. Part 3: Description of work completed Resolution 1 That the remuneration of the Liquidator, his partners and staff incurred in relation to the Liquidation of Queensland Rugby Union Club Incorporated (In Liquidation) for the period 9 July 2012 to 31 December 2013, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton - Recovery and Reorganisation Services. Such remuneration is to be set at $159,521, plus GST and disbursements, and should be drawn to the extent of available funds. Company Practitioner(s) Administration Type Queensland Rugby Union Club Incorporated (In Liquidation) Michael Gerard McCann and Graham Robert Killer Official Liquidation Period From 9 July 2012 To 31 December 2013 Firm Grant Thornton Australia Limited Task Area General Description Includes Assets hours $52, Stock (Alcoholic and Non-Alcoholic Beverages) Liaising with valuers Reviewing asset listings (valuation) Attending the Club and securing the assets Conducting stocktake Reviewing stock values Liaising with purchasers 2014 Grant Thornton Report to Creditors

18 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 3 of 15 Task Area General Description Includes Creditors hours $49, Plant and Equipment Assets subject to specific charges Debtors Other Assets Leasing Creditor Enquiries Retention of Title Claims Secured creditor reporting Creditor reports Liaising with valuers, auctioneers and interested parties Reviewing asset listings All tasks associated with realising a charged asset Correspondence with debtors Reviewing and assessing debtors ledgers Reconciling debtor s deposits Liaising with management and staff Tasks associated with realising other assets Reviewing leasing documents Liaising with owners/lessors Tasks associated with disclaiming leases Receive and follow up creditor enquiries via telephone Maintaining creditor enquiry register Review and prepare correspondence to creditors and their representatives via facsimile, and post Receive initial notification of creditor s intention to claim Maintain retention of title file Meeting claimant on site to identify goods claimed Adjudicate retention of title claim Forward correspondence to claimant notifying outcome of adjudication Preparing reports to secured creditor Responding to secured creditor s queries Preparing investigation, meeting and general reports to creditors 2014 Grant Thornton Report to Creditors

19 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 4 of 15 Task Area General Description Includes Employees hours $10, Investigations hours $21, Dealing with proofs of debt Members enquires Employees enquiry GEERS Calculation of entitlements Conducting investigation Litigation / Recoveries Receipting and filing Proofs of Debt when not related to a dividend Initial day one letters Responding to members queries Receive and follow up employee enquiries via telephone Maintain employee enquiry register Review and prepare correspondence to creditors and their representatives via facsimile, and post Preparation of letters to employees advising of their entitlements and options available Receive and prepare correspondence in response to employees objections to leave entitlements Correspondence with GEERS Preparing notification spreadsheet Preparing GEERS quotations Preparing GEERS distributions Calculating employee entitlements Reviewing employee files and company s books and records Reconciling superannuation accounts Reviewing awards Collection of company books and records Reviewing company s books and records Review of company nature and history Conducting and reviewing statutory searches Internal meetings to review and discuss potential litigation 2014 Grant Thornton Report to Creditors

20 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 5 of 15 Task Area General Description Includes Administration hours $23, Statutory 9.10 hours $2, Document maintenance/file review/checklist Insurance Bank account administration Planning/Review Books and records/ storage ATO & other statutory reporting Documents of Appointment Report as to Affairs Filing of documents File reviews Updating checklists Identification of potential issues requiring attention of insurance specialists Correspondence with Blue Broking regarding initial and ongoing insurance requirements Reviewing insurance policies Preparing correspondence opening and closing accounts Requesting bank statements Bank account reconciliations Correspondence with bank regarding specific transfers Discussions regarding status of administration Dealing with records in storage Sending job files to storage Notification of appointment Preparing BAS Completing PAYG Payment Summaries/group certificates Preparation Review Execution Filing with the Office of Fair Trading Directors Questionnaire Completion deadlines and extensions Filing with the Office of Fair Trading 2014 Grant Thornton Report to Creditors

21 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 6 of 15 Task Area General Description Includes Statutory Forms Preparing and lodging statutory forms including 505, 524, 911, etc. with the Office of Fair Trading Correspondence with the Office of Fair Trading regarding statutory forms Total hours $159, Grant Thornton Report to Creditors

22 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 7 of 15 Part 4: Employee Calculation of Remuneration Position $/Hr (excl. Total cost excl. GST) Total Hours GST ($) Hrs $ Hrs $ Hrs $ Hrs $ Hrs $ Hrs $ Graham Killer Partner Michael McCann Partner , Michael McCann Partner , , , , Chris Watson Associate Director , , James Jones Manager , , James Jones Manager , , , , Jonathan Kairuz Superv isor Jonathan Kairuz Superv isor , , , , , , Garth O'Connor Superv isor Gary Lam Senior Accountant , , Ly le Fernandes Accountant Aaron Prev ite Accountant , , , , Aaron Prev ite Graduate , , , , , , Caitlin Wilkinson Graduate Caitlin Wilkinson Graduate Camille Grassick Graduate , , , Holly Millman Graduate Cara Wood Litigation Secretary Emily Midson Secretary Emily Midson Secretary , , Pippa Hocken Secretary Caroly n Kratz EDP Caroly n Kratz EDP Ly nelle Guerin EDP Ly nelle Guerin EDP , , Tany a Brow n EDP Alex Collivas Undergraduate Alex Collivas Undergraduate , , , Courtney Butler Graduate Courtney Butler Undergraduate , , Total $ 159, , , , , , ,443 GST $ 15,952 Total (Incl. GST) $ 175,473 Av erage hourly rate (Ex cl. GST) $ $ $ $ $ $ $ IPAA Tasks Administration Assets Creditors Employees Investigations Statutory 2014 Grant Thornton Report to Creditors

23 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 8 of 15 Part 5: Description of work to be completed Resolution 2 That the remuneration of the Liquidator, his partners and staff for work carried out in relation to Queensland Rugby Union Club Incorporated (In Liquidation) be hereby calculated by reference to the current and future hourly rates of Grant Thornton-Recovery and Reorganisation Services. Such remuneration for the period 1 January 2014 to the finalisation of the Liquidation is to be capped at $20,000 plus GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any annual increase to hourly rates charged will not exceed 10% of the current or prior year s hourly rates of Grant Thornton-Recovery and Reorganisation Services. Company Practitioner(s) Administration Type Period Queensland Rugby Union Club Incorporated (In Liquidation) Michael Gerard McCann and Graham Robert Killer Official Liquidation Firm From 1 January 2014 To Finalisation Grant Thornton Australia Limited Task Area General Description Includes Creditors hours $6, Creditor Enquiries Creditor reports Dealing with proofs of debt Meeting of Creditors Receive and follow up creditor enquiries via telephone Review and prepare correspondence to creditors and their representatives via facsimile, and post Preparing investigation, meeting and general reports to creditors Receipting and filing Proofs of Debt when not related to a dividend Corresponding with OSR and ATO regarding Proofs of Debt when not related to a dividend Preparation meeting notices, proxies and advertisements Forward notice of meeting to all known creditors 2014 Grant Thornton Report to Creditors

24 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 9 of 15 Task Area General Description Includes Investigations hours $9, Conducting investigation Statutory reporting Document maintenance/file review/checklist Preparation of meeting file, including agenda, certificate of postage, attendance register, list of creditors, reports to creditors, advertisement of meeting and draft minutes of meeting. Preparation and lodgement minutes of meetings with OFT Responding to stakeholder queries and questions immediately following meeting Finalise reviewing company s books and records Finalise conducting and reviewing statutory searches Finalise review of specific transactions and liaising with parties regarding certain transactions Finalise investigation file Lodgement of investigation reports with the Office of Fair Trading Preparation and lodgement of supplementary report if required Preparing statutory reports Liaising with the Office of Fair Trading Administration review Filing of documents Updating checklists Administration hours $2, Bank account administration Finalisation Preparing correspondence opening and closing accounts Requesting bank statements Bank account reconciliations Correspondence with bank regarding specific transfers Preparing correspondence to close account Notifying ATO of finalisation 2014 Grant Thornton Report to Creditors

25 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 10 of 15 Task Area General Description Includes Statutory hours $2, Books and records/ storage Statutory Forms and Reporting Cancelling ABN / GST / PAYG registration Completing checklists Finalising WIP Dealing with records in storage Sending job files to storage Preparing and lodging ASIC forms including 505, 524, etc Correspondence with the Office of Fair Trading regarding statutory forms Preparing BAS Total hours $20, Part 6: Schedule of remuneration methods and hourly rates The rates for our remuneration calculation are set out in the following tables together with a general guide showing the qualifications and experience of staff engaged in the administration and the role they take in the administration. The hourly rates charged encompass the total cost of providing professional services and should not be compared to an hourly wage Grant Thornton Report to Creditors

26 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 11 of 15 Title Description of Title Hourly Rate (ex GST) (QLD) as at FY2014 Partner Registered Liquidator / Trustee. Partner bringing specialist skills to Administrations and Insolvency matters. Controlling all matters relating to the assignment. Associate Director Senior Manager Manager Supervisor / Assistant Manager Senior Intermediate Graduate Undergraduate Qualified accountant (CA/CPA) and may be a registered Liquidator/Trustee. Minimum 7/8+ years experience. Likely to be appointed as a director in due course. Highly advanced technical and commercial skills. Planning and control of all Administration and Insolvency tasks. Controlling substantial matters relating to the assignment and reporting to the appointee. Qualified accountant (CA/CPA). 7/8+ years experience. Well developed technical and commercial skills. Planning and control of all Administration and Insolvency tasks. Controlling substantial matters relating to the assignment and reporting to the appointee. Typically CA/CPA Qualified. 5-8 years experience. Well developed technical and commercial skills. Planning and control of Administration and Insolvency tasks with the assistance of the appointee. Typically CA/CPA Qualified. 4+ years experience. Co-ordinates planning and control of small to medium Administrations and Insolvency tasks. Conducts certain aspects of larger Administrations. Typically CA/CPA Qualified. 3-5 years experience. Required to control the fieldwork on Administrations and Insolvency tasks. Typically undertaking CA/CPA Qualifications. Up to 3 years experience. Required to conduct the fieldwork on smaller Administrations and Insolvency tasks and assist with fieldwork on medium to large Administrations and Insolvency tasks. Typically less than 1 years experience. Required to assist with the day to day fieldwork on Administrations and Insolvency tasks under the supervision of intermediate and senior staff. Typically less than 1 years experience, usually working part time whilst studying a university undergraduate qualification. Required to assist with the day to day fieldwork on Administrations and Insolvency tasks under the supervision of intermediate and senior staff. Hourly Rate (ex GST) (QLD) as at FY2013 $550 $540 $495 $495 $450 $440 $405 $395 $365 $355 $330 $325 $270 $260 $230 $220 $190 $ Grant Thornton Report to Creditors

27 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 12 of 15 Secretary Carries out all secretarial functions relating to an Administration. $175 $170 Administrator Conducts all aspects relating to administering the accounts function. $175 $170 Part 7: Statement of Remuneration Claim We, Michael McCann and Graham Killer of Grant Thornton state that: 1. The creditors will be asked at the meeting of creditors on Thursday, 27 February 2014 to consider: That the remuneration of the Liquidator, his partners and staff incurred in relation to the Liquidation of Queensland Rugby Union Club Incorporated (In Liquidation) for the period 9 July 2012 to 31 December 2013, be hereby calculated on a time basis and by reference to the hourly rates of Grant Thornton - Recovery and Reorganisation Services. Such remuneration is to be set at $159,521, plus GST and disbursements, and should be drawn to the extent of available funds. 2. Remuneration to be Approved Future Work of the Liquidators: That the remuneration of the Liquidator, his partners and staff for work carried out in relation to Queensland Rugby Union Club Incorporated (In Liquidation) be hereby calculated by reference to the current and future hourly rates of Grant Thornton-Recovery and Reorganisation Services. Such remuneration for the period 1 January 2014 to the finalisation of the Liquidation is to be capped at $20,000 plus GST and disbursements, and should be drawn to the extent of available funds. In respect to remuneration calculated by reference to future hourly rates, any annual increase to hourly rates charged will not exceed 10% of the current or prior year s hourly rates of Grant Thornton-Recovery and Reorganisation Services. Part 7A: Schedule of remuneration methods and hourly rates Please find below a summary of remuneration method, the method chosen for this remuneration claim and an explanation of the hourly rates. Remuneration Methods There are four basic methods that can be used to calculate the remuneration charged by an insolvency Practitioner. They are: a. Time based / hourly rates 2014 Grant Thornton Report to Creditors

28 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 13 of 15 This is the most common method. The total fee charged is based on the hourly rate charged for each person who carried out the work multiplied by the number of hours spent by each person on each of the tasks performed. b. Fixed Fee The total fee charged is normally quoted at the commencement of the administration and is the total cost for the administration. Sometimes a Practitioner will finalise an administration for a fixed fee. c. Percentage The total fee charged is based on a percentage of a particular variable, such as the gross proceeds of assets realisations. d. Contingency The practitioner s fee is structured to be contingent on a particular outcome being achieved. Method chosen Given the nature of this Liquidation we propose that our remuneration be calculated on time based/hourly rates basis. This is because we believe that this method truly reflect the hours worked by individual staff members and the expenses associated with conducting the Liquidation. Explanation of Hourly Rates The rates for our remuneration calculation are set out in the attached Charge Rates. The hourly rates charged encompass the total cost of providing professional services and should not be compared to an hourly wage. Part 8: Remuneration Recoverable from External Sources There are no remunerations recoverable from external sources. Part 8: Disbursements Disbursements are divided into three types: A, B1, B Grant Thornton Report to Creditors

29 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 14 of 15 A B1 disbursements are all externally provided professional services. These are recovered at cost. An example of an A disbursement is legal fees. disbursements are externally provided non-professional costs such as travel, accommodation and search fees. B1 disbursements are recovered at cost. B2 disbursements are internally provided non-professional costs such as photocopying, printing and postage. B2 disbursements, if charged to the Administration, would generally be charged at cost; though some expenses such as telephone calls, photocopying and printing may be charged at a rate which recoups both variable and fixed costs. I have undertaken a proper assessment of disbursements claimed for the Queensland Rugby Union Club Incorporated (In Liquidation) in accordance with the law and applicable professional standards. I am satisfied that the disbursements claimed are necessary and proper. Basis of disbursement claim: Disbursements Advertising Courier Local Faxes / Inter-state Faxes / International Faxes Postage Rate (Excl GST) At Cost At Cost $1.00 / $2.00 / $3.00 per page $0.60 per page Scale applicable for financial year ending 30 June 2014 Part 8: Report on Progress of the Administration Please refer to the Report. Part 9: Summary of Receipts and Payments Please refer to the Report Grant Thornton Report to Creditors

30 Annexure B Queensland Rugby Union Club Incorporated (In Liquidation) Remuneration Request Approval Report Page 15 of 15 Part 10: Queries If you require any further information, please contact Aaron Previte of our office on or qruc@au.gt.com. Part 11: Information Sheet Please find enclosed in the report a copy of the ASIC Information for Creditors sheet that outlines further information regarding the remuneration approval and payment process. This information is provided by the Australian Restructuring Insolvency and Turnaround Association ("ARITA") (formerly the Insolvency Practitioners Association of Australia, or IPA) Grant Thornton Report to Creditors

31 INFORMATION SHEET 85 Approving fees: a guide for creditors If a company is in financial difficulty, it can be put under the control of an independent external administrator. This information sheet gives general information for creditors on the approval of an external administrator s fees in a liquidation of an insolvent company, voluntary administration or deed of company arrangement (other forms of external administration are not discussed in this information sheet). It outlines the rights that creditors have in the approval process. Entitlement to fees and costs A liquidator, voluntary administrator or deed administrator (i.e. an external administrator ) is entitled to be: paid reasonable fees, or remuneration, for the work they perform, once these fees have been approved by a creditors committee, creditors or a court, and reimbursed for out-of-pocket costs incurred in performing their role (these costs do not need creditors committee, creditor or court approval). External administrators are only entitled to an amount of fees that is reasonable for the work that they and their staff properly perform in the external administration. What is reasonable will depend on the type of external administration and the issues that need to be resolved. Some are straightforward, while others are more complex. External administrators must undertake some tasks that may not directly benefit creditors. These include reporting potential breaches of the law and lodging a detailed listing of receipts and payments with ASIC every six months. The external administrator is entitled to be paid for completing these statutory tasks. For more on the tasks involved, see ASIC s information sheets INFO 45 Liquidation: a guide for creditors and INFO 74 Voluntary administration: a guide for creditors. Out-of-pocket costs that are commonly reimbursed include: Important note: This information sheet contains a summary of basic information on the topic. It is not a substitute for legal advice. Some provisions of the law referred to may have important exceptions or qualifications. This document may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances. You will need a qualified professional adviser to take into account your particular circumstances and to tell you how the law applies to you. Australian Securities & Investments Commission, December 2008 Page 1 of 5